Question
Direct Labor Variances La Batre Bicycle Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available: Quantity
Direct Labor Variances
La Batre Bicycle Company manufactures commuter bicycles from recycled materials. The following data for July of the current year are available:
Quantity of direct labor used | 670 hrs. |
Actual rate for direct labor | $14.2 per hr. |
Bicycles completed in April | 310 bicycles |
Standard direct labor per bicycle | 2 hrs. |
Standard rate for direct labor | $14.5 per hr. |
a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Direct Labor Rate Variance | $fill in the blank 1 | FavorableUnfavorableFavorable |
Direct Labor Time Variance | $fill in the blank 3 | FavorableUnfavorableUnfavorable |
Total Direct Labor Cost Variance | $fill in the blank 5 | FavorableUnfavorableUnfavorable |
b. How much direct labor should be debited to Work in Process? $fill in the blank 7
Feedback
Unfavorable variances can be thought of as increasing costs (a debit). Favorable variances can be thought of as decreasing costs (a credit).
The labor cost variance is the difference between the actual and standard labor cost.
Learning Objective 3, Learning Objective 5.
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